SBI Estimates India's First Quarter GDP Growth At 8.3%, Full Year Growth Rate At 6.7%

In the April-June 2022, the economy registered a substantial growth of 13.1 per cent, primarily due to a favorable base effect. 

The GDP data for the April-June period will be announced on August 31. 

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The Indian economy may have grown by 8.3 per cent in April-June backed by the rapid increase in capital expenditure by Central and state governments, said the latest SBI Research report on Tuesday. The report authored by Soumya Kanti Ghosh, SBI's chief economic advisor also projected a growth rate of 6.7 per cent for the financial year 2023-24 (FY24).

"At SBI, we have developed an Artificial Neural Network (ANN) model with 30 high-frequency indicators… On the basis of the ANN model, we forecast that the quarterly GDP growth for the Q1FY24 (April-June 2023) would be at 8.3 per cent," Ghosh said in the report. 

SBI's growth projection of 8.3 per cent for April-June would mark the highest rate in four consecutive quarters. In the same period of April-June 2022, the economy registered a substantial growth of 13.1 per cent, primarily due to a favorable base effect. 

The Reserve Bank of India (RBI) has projected the GDP growth for the first quarter of the financial year 2023-24 (Q1 FY24) to be 7.8 per cent, with a full-year FY24 growth estimate of 6.5 per cent. The GDP data for the April-June period will be announced on August 31.

As per Ghosh, Q1 FY24 saw a substantial surge in capital expenditure from both the central and state governments. The Centre's capital expenditure during April-June reached Rs 2.78 lakh crore, which is nearly 28 per cent of the ambitious annual target of Rs 10 lakh crore. Notably, this was following a remarkable year-on-year growth of 63 per cent in June. Ghosh highlighted that certain states, including Andhra Pradesh, Telangana, and Madhya Pradesh, recorded capex growth rates of up to 41 per cent.

Additionally, Ghosh noted encouraging trends in corporate results, mentioning that Indian companies achieved a profit-after-tax (PAT) increase of over 30 per cent during April-June.

"Further, it is pertinent to mention that corporate margin, which was under pressure for the last few quarters, has shown signs of improvement since Q4FY23 (January-March 2023). EBIDTA margin, on an aggregate basis of more than 3,000 companies, improved by 274 basis points to 15.81 percent in Q1FY24 as compared to 13.07 percent in Q4FY23 and 12.60 percent in Q1FY23 (April-June 2022), contributed by low input prices," the SBI economist said.